Why ASX tech stocks are crashing: TechnologyOne down 17%, Xero and Wisetech hit 52-week lows
Premium tech multiples are fading fast as yields surge and liquidity tightens, with TechnologyOne crashing 17% despite solid results.
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KEY POINTS
- Australian tech stocks are experiencing a brutal derating with Wisetech down 49.5% YTD, Xero down 30%, and TechnologyOne falling 17% in a single session despite delivering solid FY25 results that beat on revenue and margins.
- Multiple headwinds are converging including Australian 10-year yields surging 38bps to 4.48%, hot CPI data pushing RBA rate cut expectations to mid-2026, and US liquidity stress with repo rates hitting 4.32% above the Fed's benchmark range.
- Self-inflicted wounds at Xero and Wisetech from expensive acquisitions (Melio at $2.5bn and e2open) are compounding the broader macro pressure, with both deals expected to dilute earnings while integration risks weigh on sentiment.
Some of the market's favourite growth stocks have been dropping like flies, with large caps Wisetech and Xero falling to fresh 52-week lows last week, while high-flying names Life360, Catapult and Qoria are all down 10-20% in the last five sessions.
Catapult (grey), Qoria (red), TechnologyOne (purple), Pro Medicus (green), Xero (blue) and Wisetech (yellow) | Source: TradingView
Ticker | Company | YTD (now) | YTD (peak) |
|---|---|---|---|
360 | Life360 | 52% | 145% |
CAT | Catapult Sports | 35% | 108% |
QOR | Qoria | 26% | 88% |
PME | Pro Medicus | 1% | 32% |
TNE | TechnologyOne | -3% | 31% |
XRO | Xero | -30% | 16% |
WTC | Wisetech | -49.5% | 6.5% |
Data as at Wednesday, 19 November 2025
It's a painful de-rating process amid several headwinds including:
Economic data: Hot Australian CPI (Q3 trimmed mean up 3.0%) and solid jobs data (unemployment rate back to 4.3% from 4.5% the prior month) have hosed down RBA rate cut expectations through to mid 2026
Yields: Australian 10-year yield surged almost 40 bps since 22-Oct, it hit a brief 4.52% on Monday. A simple way to put it is that nothing good tends to happen at these levels.
Valuations: In early October, these stocks traded at the following trailing price-to-earnings – Xero (102x), Wisetech (95x), TechnologyOne (96x) and Pro Medicus (276x). This makes Nvidia (54x) look cheap!
Broader market: The ASX 200 is down almost 7% since its 21-Oct record high. It dipped below the 50-day moving average on 30-Oct and the 200-day on 18-Nov.
Liquidity: Key gauges of US borrowing have spiked to pandemic-era levels, with overnight general collateral repo rates hitting 4.32% last Friday, well above the Fed's 3.75-4% benchmark range, while the Fed's reverse repo facility sits nearly empty. This is taking the life out of liquidity/risk barometers like Bitcoin, which is down ~27% since its 6-Oct record high of US$126,272.
Taking a closer look
TechnologyOne is the latest stalwart to fumble, with the stock down 17% on Tuesday following the release of its FY25 results. The result was relatively in-line with market expectations, alongside an unexpected special dividend of 10 cents per share.
Revenue up 18% to $598.5m vs. $593.7m ests (0.8% beat)
Total ARR up 18% to $554.6m vs. $568.3m ests (2% miss)
EBITDA margin up 100 bps to 43.0% vs. 43.0% ests (in-line)
Underlying NPAT up 17% to $137.6m vs. $139.8m ests (1.6% miss)
Final dividend of 20 cps plus a 10 cps special dividend
Total FY25 dividend up 63% to 36.6 cps
It was a fairly orderly result, with all metrics growing at a healthy double-digit clip. Profits were in-line with market expectations, annual recurring revenues a slight miss and a sizeable dividend surprise. Instead of a positive share price reaction, TNE shares opened -6.5% lower ($33.01), down -13.7% ($30.47) by noon and finished at intraday lows of -17.2% ($29.26).
TechnologyOne daily price chart (Source: TradingView)
If you zoom out, it's not an unreasonable selloff (albeit it's all happening at once).
TNE shares gained around 300% between late 2015 and early 2024. For most of this period, the stock traded at a price-to-earnings of around 35-45x. During this time, TNE's net profit soared from $35.7 million in FY15 to $118 million in FY24, a CAGR of approximately 14.2%.
Around April 2024, the stock took returns to another level, rallying another 140% over the next 14 months. This rally was driven mostly by multiple expansion (share price outpacing earnings growth) and as a result, its price-to-earnings soared from 46x in April 2024 to a peak of 105x in June 2025.
In essence, TNE got twice as expensive, despite growing at relatively the same historic pace (as today's results would show).
Technology One price (top) vs. price-to-earnings (bottom) | Source: TradingView
There's nothing wrong with multiple expansion, most tech stocks have been riding the same tailwind as investors pile into stocks riding tech, software and AI themes. This was further buoyed by factors such as rate cuts, easing inflation (at least back then) and the early innings of AI proliferation.
But as headwinds begin to emerge (like the ones stated at the very top of the article), premium multiples can fade quickly. This isn't a reflection of the company deteriorating but just the price tag.
Another way to look at it: what's standing between TNE trading at 100x vs. 45x? Again, it really comes down to those factors mentioned above.
Is the market riding the euphoria that inflation has peaked and rates are coming down?
Are tech stocks trading at a reasonable valuation (and therefore have room for multiple expansion)?
Have yields topped and therefore provide a tailwind for long duration pockets of the market like tech?
Once these drivers begin to topple, then you have the reverse in play, where multiples detract. But that detraction eventually spells opportunity, as the TNE result shows the company continues to grow at a healthy clip.
Self-inflicted pain
While Life360, TechnologyOne and Qoria delivered relatively orderly results that met or slightly exceeded expectations, Xero and Wisetech are dealing with self-inflicted wounds that have exacerbated their declines.
Xero was already down around 27% between June and early November. This follows a $1.85 billion placement to acquire US-based payments platform Melio for $2.5 billion. Analysts viewed the deal as strategically aligned with management's US ambitions, but the high valuation and earnings dilution through FY28 have spooked investors. Much of the value relies on future scaling and margin expansion that's far from guaranteed.
Wisetech is working through its largest deal to date, the acquisition of e2open in May, which expands its revenue base significantly and pushes deeper into upstream logistics. While the business was acquired at a better multiple than Melio and Wisetech has a strong M&A track record, integration risks remain. The stock has also dipped 20.2% and 11.8% on its last two results (1H25 and FY25), both of which missed expectations with soft guidance. Adding to the pressure are ongoing insider trading allegations involving four ex-directors and founder Richard White.
The bottom line
Tech stocks are experiencing a massive unwind after a formidable rally over the past twelve months. The fundamentals for most names have remained relatively unchanged, though the two largest, Xero and Wisetech, have greatly underperformed due to self-inflicted decisions that have compounded macro headwinds.
The broader market is looking fragile. The Nasdaq has dipped below its key 50-day moving average, while Bitcoin tumbled almost 30% from its 6 October record high. This leaves us with an environment that isn't exactly accommodative for multiple expansion or risk tolerance.
Could these bearish drivers subside and the market pick up from where it left off? It could. Could this be the top with sideways or downward price action for the short-to-medium term? Also likely.
We're currently in the midst of a volatile period where indices are oversold and due for a short-term bounce, but the near-term remains a period of max confusion. Perhaps the right mindset for longer-term investors to take right now is "if it ain't broke, stay invested."
